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on Efficiency and Productivity |
| By: | Helfand, Steven M.; Lima Cavalcanti, Francisco; Freitas, Carlos Otávio; Moreira, Ajax R B; Schling, Maja |
| Abstract: | Brazil ranks among the worlds top four agricultural producers and exporters, and continued growth is important for domestic and global food security. Sustained productivity growth is essential to support this expansion. This study estimates a stochastic frontier production function and calculates total factor productivity (TFP) growth in Brazilian agriculture. TFP is decomposed into components related to technology, weather (growing degree days), policy variables, and other factors. The analysis uses municipal Agricultural Census data from 1985 to 2017. TFP increased at 1.56% per year, accounting for 60% of output growth. The decomposition highlights the slowing effect of climatic factors, alongside the accelerating influence of investments in R&D and education. A key finding is the pronounced divergence in outcomes across many dimensions. Output and TFP growth were fastest in the Cerrado biome, characterized by large farms, and slowest in the Caatinga. Output became increasingly concentrated in a small number of municipalities, which tended to exhibit faster TFP growth and specialization in annual crops such as soybeans. Conversely, about one-third of municipalities experienced decline in output and TFP. The findings have significant policy implications for addressing climate change, guiding investments in R&D, and managing the growing divergence of outcomes. |
| Keywords: | Agricultural productivity;productivity growth;climate change;Agriculture;R&D |
| JEL: | Q10 Q16 Q54 O13 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14646 |
| By: | Bijnens, Gert; Konings, Jozef; Putseys, Aaron |
| Abstract: | This paper identifies a firm-level Productivity J-curve induced by intangible investments. Using novel microdata on business-to-business transactions for Belgian firms, we construct a comprehensive measure of intangible investment covering software, R&D, design, training, and organizational capital. Our analysis shows that returns on intangibles substantially exceed those of traditional production factors, highlighting their central role in value creation. However, because intangible expenditures are rarely capitalized and are often recorded as intermediate inputs, they are not properly accounted for in conventional measures of total factor productivity (TFP). This misclassification creates systematic mismeasurement, whereby inputs are overstated relative to output in the short run, leading to an underestimation of TFP. Exploiting the lumpy nature of intangible expenditures within a difference-in-differences event-study framework, we document that such mismeasurement results in a persistent underestimation of TFP, by about 3% over a seven-year horizon. Given average measured TFP growth of 1% annually, this represents a substantial distortion. The bias is strongest among small, young, and low- capital intensive firms, reflecting slower absorption of intangible assets. By clarifying how intangible capital and emerging technologies such as AI systematically distort measured productivity, our findings provide new empirical insights into the productivity slowdown and the role of mismeasurement in modern economies. |
| Keywords: | Productivity |
| JEL: | E01 E22 E23 O32 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20825 |
| By: | Schling, Maja; Ortiz, María Camila; Perez Massard, Renee Gabriela; Saenz Somarriba, Magaly; Chang Huaita, Rodrigo Ysaac |
| Abstract: | This paper analyzes trends in agricultural total factor productivity in Bolivia between 2008 and 2015 and the factors driving these trends using national agricultural surveys. On balance, the findings suggest that agricultural total factor productivity increased by 1.8% annually between 2008-2015. Among productive inputs, land shows the largest marginal effect on the value of agricultural production. Regarding temperature shocks, the study finds that each additional harmful degree day during the growing season is associated, on average, with a 9.8% decrease in the value of agricultural output. With regards to policy drivers, no statistically significant effect of land titling within the last two years is detected on productivity. Public irrigation infrastructure has a positive effect on productivity, though its magnitude decreases with rising incidence of precipitation. These findings underscore the importance of continuing to invest public resources efficiently in infrastructure that can boost agricultural productivity and prioritize investments targeting regions with the lowest productivity growth rates and with the smallest share of land and workers. |
| Keywords: | Bolivia;Agriculture;total factor productivity;Latin America |
| JEL: | O13 O33 Q12 Q16 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14632 |
| By: | Luis Orea; Alan Wall; Roberto Balado-Naves |
| Abstract: | This chapter discusses the empirical literature that uses a spatial stochastic frontier (SSF) analysis framework in production economics. We first outline standard spatial extensions of the classical stochastic frontier models aiming to capture the spillover effects of neighbouring production units. We then turn our attention to studies mainly focused on spatially correlated noise and inefficiency terms. Following this, semiparametric and nonparametric models, and modern approaches incorporating space-varying coefficients, unobserved common factors, stochastic spatial weight matrices, endogeneity and latent class structures, are discussed. We then provide a section with guidelines for researchers regarding model selection followed with a section devoted to issues relating to returns to scale and productivity growth are then discussed. A brief guide for practitioners to available software is provided in an appendix. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:oeg:wpaper:2026/02 |
| By: | Luca Guerrieri; Jinill Kim; Arsenii Mishin |
| Abstract: | Within narrowly defined industries, the most productive firms produce far more than the least productive from the same inputs, and this dispersion widens in downturns. We build a tractable representative-agent model in which financial frictions—adverse selection and moral hazard—make firms sort endogenously into lenders, strategic defaulters, and producers. As credit conditions vary, the resulting misallocation gives aggregate total factor productivity (TFP) an endogenous component that accounts for about 30 percent of the variance of TFP at business-cycle frequencies, a third of it from strategic default. We show that our tractable model can match key features of the observed distribution of productivity across firms and its co-movement with output growth and credit conditions in the data. |
| Keywords: | productivity dispersion; endogenous productivity; financial intermediation; business cycles |
| JEL: | E23 E32 E44 |
| Date: | 2026–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103448 |
| By: | Cavalcanti, Tiago; Kamkar, Kilian |
| Abstract: | Does improving agricultural productivity spare forests or accelerate their demise? We offer a new perspective on this debate by emphasizing the relative agricultural suitability of forest versus available vacant land for conversion. We develop a parsimonious framework in which land differs in agricultural efficiency across alternative expansion margins, showing that productivity gains translate into deforestation only when forests constitute the most cost-effective source of additional effective land. We test this prediction using a quasi-experimental design based on Tanzania’s National Agricultural Input Voucher Scheme (NAIVS), which promoted modern seed and fertilizer adoption. Combining high-resolution satellite data on forest loss with spatial data on soil nitrogen to proxy relative suitability, we find that the program increased deforestation only in villages where vacant land was substantially less productive than forest land. Our results highlight the central role of land quality heterogeneity in shaping the environmental consequences of agricultural productivity growth, offer a complementary explanation for land-sparing versus expansionary outcomes, and point to a role for directed agricultural innovation in mitigating deforestation without constraining productivity growth. |
| Keywords: | Deforestation; Tanzania |
| JEL: | Q15 Q23 Q24 O13 O33 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21131 |
| By: | J. Scott Davis |
| Abstract: | Because AI use varies across countries, we can draw on international data to investigate the relationship between AI exposure and productivity growth at the sector level. The positive relationship in the U.S. fits a pattern visible among countries and appears related to high AI use. |
| Keywords: | artificial intelligence (AI); labor; productivity |
| Date: | 2026–07–07 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:103494 |
| By: | Lenzu, Simone; Rivers, David; Tielens, Joris; Hu, Shi |
| Abstract: | We study the interconnection between the productivity and pricing effects of financial shocks. Combining administrative records on firm-level output prices and quantities with quasi-experimental variation in credit supply, we show that a tightening of credit conditions has a persistent, yet delayed, negative effect on firms’ long-run physical productivity growth (TFPQ) but also induces firms to change their pricing policies. Commonly used revenue-based productivity measures (TFPR) — which conflate price and productivity — offer biased predictions regarding the consequences of financial shocks for firms’ productivity growth, underestimating the long-run elasticity of physical productivity to credit supply by half. We also show that the pricing adjustments themselves have productivity implications. Firms use low pricing as a source of internal financing, allowing them to avoid cutting expenditures on productivity-enhancing activities, thereby softening the impact of financial shocks. We incorporate these forces into a quantitative model of firm dynamics to quantify the importance of productivity and pricing dynamics (and their interplay) in driving the scarring effects of financial crises on aggregate productivity and welfare. |
| Keywords: | Productivity; Pricing; Innovation |
| JEL: | D22 D24 E31 E44 G01 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21218 |
| By: | Aldasoro, Inaki; Gambacorta, Leonardo; Pál, Rozália; Revoltella, Debora; Weiss, Christoph; Wolski, Marcin |
| Abstract: | This paper provides new evidence on how the adoption of artificial intelligence (AI) affects productivity and employment in Europe. Using matched EIBIS-ORBIS data on more than 12, 000 non-financial firms in the European Union (EU) and United States (US), we instrument the adoption of AI by EU firms by assigning the adoption rates of US peers to isolate exogenous technological exposure. Our results show that AI adoption increases the level of labor productivity by 4%. Productivity gains are due to capital deepening, as we find no adverse effects on firm-level employment. This suggests that AI increases worker output rather than replacing labor in the short run, though longer-term effects remain uncertain. However, productivity benefits of AI adoption are unevenly distributed and concentrate in medium and large firms. Moreover, AI-adopting firms are more innovative and their workers earn higher wages. Our analysis also highlights the critical role of complementary investments in software and data or workforce training to fully unlock the productivity gains of AI adoption. |
| Keywords: | Artificial intelligence; Firm productivity; Europe; Digital transformation |
| JEL: | D22 J24 L25 O33 O47 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21082 |
| By: | OECD |
| Abstract: | This report reviews six indices of environmentally sustainable productivity growth (SPG) that integrate agricultural total factor productivity (TFP) growth and trends in four agri-environmental externalities at the national level. The findings reveal only minor differences across indices when environmental dimensions are assigned low weights, but these differences widen as weights increase. This variation reflects index-specific conditions under which SPG exceeds TFP. Some indices require externalities to grow more slowly than outputs or input (relative decoupling) while others require externalities to decrease (absolute decoupling). Three case studies (Mexico, The Netherlands and New Zealand), illustrate potential drivers of SPG. In Mexico, improved market access resulting from trade-agreements, alongside shifts in agricultural support appeared to be key factors. In the Netherlands, regulatory measures targeting ammonia, fertilisers and manure management contribute to positive SPG outcomes. In New Zealand, performance is associated with export-driven output growth, herd dynamics, and the adoption of new technologies. |
| Keywords: | Agri-environmental performance, Agriculture, Environment, Total Factor Productivity |
| JEL: | D24 O44 Q18 Q56 |
| Date: | 2026–07–20 |
| URL: | https://d.repec.org/n?u=RePEc:oec:agraaa:228-en |
| By: | Bertaut, Carol; Curcuru, Stephanie E.; Faia, Ester; Gourinchas, Pierre-Olivier |
| Abstract: | This paper studies the efficiency of international capital flows into and out of the U.S. using security-level equity holdings matched to firm-level measures of economic performance from 1995 to 2022. We find that both US and foreign investors tilt their international equity portfolio toward the top of the firm distributions of Total Factor Productivity (TFP), mark-ups, Marginal Revenue Product of Capital (MRPK) and intangible capital. This allocation to the top occurs primarily through a between-firm component. For US firms with high initial productivity, and for foreign firms with high MRPK, increases in international investors’ equity holdings are associated with higher future investment in the near term. |
| JEL: | E2 F3 F6 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20979 |
| By: | Bergeaud, Antonin; Nur Gozen, Ruveyda; Van Reenen, John |
| Abstract: | We introduce a methodology to measure cross-country trends in innovation capability- “technological trajectories†and implement this on a new rich dataset covering patents between 1836 and 2016 across multiple countries. Intuitively, trajectories are revealed by a country’s sustained increases in patenting across multiple patent offices. We first describe the data patterns, showing the relative decline of the UK, and the rise first of the US and Germany, and then later of Japan and China. We then econometrically estimate trajectories on (i) the post-1902 period for France, Germany, Japan, the UK and US, and (ii) the post-1960 period for a wider sample of 40 countries. Our trajectories are strongly positively correlated with Total Factor Productivity growth, and also (but less strongly) associated with the growth of labour productivity and capital intensity. We show that future trajectories are predicted by a country’s initial levels of R&D, education and defence spending, classic drivers of innovation in modern growth theory. |
| Keywords: | Patents; Technical progress; Economic history; Innovation |
| JEL: | O31 O33 O34 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21066 |
| By: | Kehrig, Matthias; Fu, Shipeng |
| Abstract: | We study how internal hierarchies affect productivity, wages, and labor shares in Chinese manufacturing firms. Using detailed information on professional titles from the 2004 Annual Survey of Industrial Production, we construct firm-level measures of hierarchical structure and compare private firms with state-owned enterprises (SOEs). Private firms operate leaner hierarchies and exhibit rising labor productivity as organizational layers expand. In contrast, SOEs adopt prematurely deep and top-heavy hierarchies associated with declining labor productivity but higher wages. As a result, labor shares are substantially higher in SOEs. Counterfactual exercises show that distortions in hiring and organizational design account for a large fraction of the labor share gap between SOEs and private firms, pointing to inefficient internal organization as an important source of aggregate misallocation. |
| Keywords: | Organizational structure; State-owned enterprises; Misallocation; Labor productivity; Labor share; China |
| JEL: | D24 L22 L25 O47 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21150 |
| By: | Sahoo, Biresh K. |
| Abstract: | Standard deterministic data envelopment analysis (DEA) treats input and output slacks as pure wastes, whereas organizational theory and chance-constrained DEA view them as potential buffers against uncertainty. Using bootstrapped regression model, this study tests whether short-run static slacks predict long-run dynamic growth efficiency (GE), drawing on a panel of 50 Indian commercial banks (2005–2024) and four slack aggregation methods. The predictive power of the model depends entirely on the evaluation horizon. Over a one-year window, slacks fail to predict GE meaningfully, producing negligible model fit and making annual assessments unreliable. Over two- or three-year horizons, positive and significant relationships emerge consistently across all slack aggregation methods, with coefficients and model fit increasing monotonically with horizon length. Introducing controls for ownership and macroeconomic phases more than doubles the estimated coefficients and markedly improves model fit, revealing that omitted-variable bias conceals slack’s true contribution. Foreign banks achieve higher predicted average GE but exhibit negative slack-ownership interactions, implying diminishing returns from slack reduction. Slack-period interactions show that post-asset quality review regulations dampen efficiency gains, while the global financial crisis era lowers GE. By bridging static short-run slack analysis with dynamic long-run GE, we offer a parsimonious strategy that reconciles deterministic DEA with uncertainty: observable static slacks can proxy for strategic reserves, avoiding the demanding joint probability distributions of chance-constrained stochastic DEA. We conclude that static short-run slack forecasts dynamic long-run GE only over horizons of at least two years, repositioning slack from a symptom of inefficiency to a strategic asset. |
| Keywords: | Data envelopment analysis; slacks; technical efficiency; growth efficiency; Indian banking |
| JEL: | D24 G21 |
| Date: | 2026–05–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129719 |
| By: | Broadbent, Ben; Di Pace, Federico; Drechsel, Thomas; Harrison, Richard; Tenreyro, Silvana |
| Abstract: | The UK economy experienced significant macroeconomic adjustments following the 2016 referendum on its withdrawal from the European Union. To understand these adjustments, this paper presents empirical facts using novel UK macroeconomic data and estimates a small open economy model with tradable and non-tradable sectors. We demonstrate that the referendum outcome can be interpreted as news about a future decline in productivity growth in the tradable sector. An immediate fall in the relative price of non-tradable goods induces a temporary “sweet spot†for tradable producers. Economic activity in the tradable sector expands in the short run, while the non-tradable sector contracts. Aggregate output, consumption and investment growth decelerate. |
| Keywords: | Brexit; Small open economy; Productivity; News shocks |
| JEL: | E32 F17 F41 F43 O16 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21019 |
| By: | Sahoo, Biresh K. |
| Abstract: | This paper computes research productivity of 108 faculty from XLRI and XIMB across five quality threshold (CABS-all, ABDC-all, CABS Top 4, ABDC Top3, and CABS Top 3) using data envelopment analysis. Four revelations emerge. First, XLRI’s apparent productivity edge over XIMB stems from heavier teaching loads at XIMB, not faculty talent. Second, while CABS and ABDC rankings converge at low threshold (broad) level, they diverge significantly at higher (stricter) thresholds. Third, threshold stringency, not the ranking source, primarily drives rank volatility. Adopting the strictest CABS Top 3 reconfigures productivity rankings drastically, displacing 73% of faculty by over ten positions. Fourth, redefining disadvantage as rank incoherence rather than absolute productivity loss reveals a disciplinary cleavage: Marketing and Operations Management retain internal cohesion, whereas Information Systems, Accounting & Finance, and Organizational Behavior & Human Resources Management experience a decoupling of broad-list success from top-tier eminence due to severe faculty attrition. As regards policy implications, XIMB must urgently expand its research faculty cohort and reduce excessive teaching loads to improve research productivity. To rectify linear research-incentive inequities, we propose a multi-layered reward mechanism that values mid-tier publications while directing its heaviest investment toward impactful research. |
| Keywords: | Research productivity; Productivity ranking; Journal quality list; Journal quality thresholds; Data envelopment analysis |
| JEL: | D24 I23 I28 |
| Date: | 2026–06–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129705 |
| By: | Miguel D. Ramirez (Department of Economics, Trinity College) |
| Keywords: | Block Granger causality test, Gregory-Hansen cointegration single-break test, Impulse Response Function (IRF), public capital stock, Johansen Cointegration test, labor productivity, KPSS no unit root test, single-break (Zivot-Andrews test), Variance Decompositions (VDCs), and vector error correction model (VECM). |
| JEL: | C22 O40 O54 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:tri:wpaper:2601 |
| By: | Minni, Virginia |
| Abstract: | Why do managers matter for firm performance? This paper provides evidence of the critical role of managers in matching workers to jobs within the firm using the universe of personnel records from a large multinational firm. The data covers 200, 000 white-collar workers and 30, 000 managers over 10 years in 100 countries. I identify good managers by their speed of promotion and leverage exogenous variation induced by the rotation of managers across teams. I find that good managers cause workers to reallocate within the firm through lateral and vertical transfers and generate large and persistent gains in workers' career progression and productivity. My results imply that the visible hands of managers match workers' specific skills to specialized jobs, leading to an improvement in the productivity of existing workers that outlasts the managers' time at the firm. |
| JEL: | J24 M5 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21234 |
| By: | Acemoglu, Daron; Akcigit, Ufuk; Johnson, Simon |
| Abstract: | This chapter presents a tractable framework for the study of technology adoption and diffusion in the context of economic development. Firms in countries behind the world technology frontier can rapidly adopt new techniques from the world frontier. Lower absorptive capacity (because of weak education systems, poor management practices, or barriers to technology adoption), institutional distortions, mismatch between frontier technologies and the needs of firms in the country (i.e., “inappropriate technology†), and credit market frictions slow down technology adoption and cause the economy in question to have a greater distance to the frontier and thus lower income per capita—although the long-run growth rate of the country still remains equal to that of the frontier. This framework is extended to study the choice between innovation and imitation, as well as the role of selection for higher-productivity and higher-absorptive capacity firms during the process of economic development. We illustrate the main comparative statics of our framework with a number of correlations based on cross-country and firm-level data. The tractability of the framework makes it amenable to a range of additional extensions. |
| Keywords: | Technology adoption; Innovation; Institutions; Economic growth; Development; Productivity |
| JEL: | O1 O3 O4 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21032 |
| By: | Carrillo, Paul; Donaldson, Dave; Pomeranz, Dina; Singhal, Monica |
| Abstract: | How costly is the misallocation of production that we might expect to result from distortions such as market power, incomplete contracts, taxes, regulations, or corruption? This paper develops new tools for the study of misallocation that place minimal assumptions on firms' underlying technologies and behavior. We show how features of the distribution of marginal products can be identified from exogenous variation in firms' input use, and how these features can be used both to test for misallocation and to quantify the welfare losses that it causes. We then consider an application in which thousands of firms experience demand shocks derived from a lottery-based assignment of public procurement contracts for construction services in Ecuador. Using administrative tax data about these firms, we reject the null of efficiency but estimate that the welfare losses resulting from misallocation are only 1.6% relative to the first-best. Standard parametric assumptions applied to the same setting would suggest losses that are at least an order of magnitude larger. |
| Keywords: | Misallocation |
| JEL: | D24 D61 H57 L10 O40 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21106 |
| By: | Hoekman, Bernard; Prosi, Daniel; Sanfilippo, Marco; Ticku, Rohit |
| Abstract: | This paper provides evidence of spillover effects from foreign direct investment (FDI) through forward linkages, a relatively neglected channel to enhance national competitiveness that is likely to become more important as countries seek to bolster domestic competitiveness and resilience to geo-economic shocks. Using granular information on the universe of firm-to-firm transactions and inward FDI in Rwanda, we find substantial and persistent effects on value-added, employment, and productivity of domestic firms after beginning to source from foreign-owned enterprises. These effects are more pervasive than those associated with selling to foreign-owned firms – the backward linkages emphasised in the literature. Suggestive evidence reveals that foreign-owned firms provide higher-quality intermediate inputs than domestic suppliers, particularly in specialized business and professional services that are difficult to import, and that these inputs complement rather than crowd out domestically sourced inputs. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21298 |
| By: | Leitao, Martim; Montana, Jaime; Silva, Joana |
| Abstract: | What determines the distribution of firm pay? How are these factors related to firm productivity? We develop a framework in which weakening pass-through from productivity to wages, arising from labor market distortions, drives inequality. We propose a new methodology to identify this pass-through, quantify its impact on wage inequality dynamics, and decompose it into labor market distortions. Applying our method to administrative data from Portugal, we find that increased labor market competition and rising minimum wages are the primary drivers of weakening pass-through. Our findings suggest that reducing labor market distortions can lower inequality, even if productivity dispersion remains unchanged. |
| Keywords: | Inequality; Wages; Imperfect competition |
| JEL: | J00 J31 J40 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21096 |
| By: | Lukas Boehnert |
| Abstract: | In 1950, highly specialized U.S. regions had higher per capita incomes than those with greater industrial diversity. Since then, however, the more specialized regions have grown persistently slower. I rationalize this novel finding in a dynamic multi-industry model featuring two opposing forces. On the one hand, specialization raises productivity via agglomeration economies. On the other hand, it increases exposure to sectoral shocks. Real factor adjustment costs and financial frictions make reallocation in response to shocks costly and long-lasting. Disciplined by U.S. Census data, the model explains half of the observed relationship between initial specialization and subsequent growth, with financial frictions accounting for more than half of this adverse effect. A constrained-efficient planner allocation reveals that less specialization can raise welfare by reducing a region’s exposure to industry-specific downturns. |
| Keywords: | regional specialization, regional growth, sectoral shocks, factor reallocation, agglomeration economies, financial frictions |
| JEL: | O4 R1 N9 E1 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12798 |
| By: | Tudorache, Maria-Daniela; Jianu, Ionut |
| Abstract: | Over the last two decades, technological progress has significantly transformed economic and social structures, making innovation and digitalization essential drivers of competitiveness and sustainable growth. However, EU still lags behind the US in terms of innovation, research and development expenditure. This paper examines the relationship between technological factors and economic development in European Union Member States. The analysis is based on panel data covering 2010-2024, with an effective estimation sample of 2012-2024 due to lag structure and first difference transformations to improve the model accuracy. The analysis applies the Panel Estimated Generalized Least Squares (EGLS) method, using Period SUR as GLS weights option and as a coefficient covariance method. The results identify positive and significant associations between the research and development expenditure / employment in technology and knowledge intensive sectors and GDP per capita. In contrast, unemployment shows a negative relationship with economic performance. These findings highlight the important role of innovation and knowledge-based sectors in supporting economic growth and competitiveness within the European Union. The results suggest that research and development activities are associated with higher levels of economic development across the European Union. This finding is particularly relevant in the current context, given that the European Union has consistently failed to meet its R&D expenditure targets throughout the 2010-2024 period, with the share of R&D expenditure in GDP increasing by only 0.25 percentage points over the last 15 years. We also calculated the impact of greenhouse gas emissions per capita on GDP per capita, which was found to be positive, indicating the short-run cost of the green transition, as well as the negative effect of the major COVID-19 restriction on GDP per capita. |
| Keywords: | technology, economic development, Panel, research and development |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esconf:341696 |